Strategic Business Development is crucial to the long-term prospects of most venture-backed companies. The alliances you form, the agreements you sign and the path you take all work to attract - or repel - your eventual acquirer - and the price!
This blog aims to discuss lessons learned during >25 years in business development for the software industry.

Wednesday, May 4, 2011

One challenge faced by Business Development professionals and executive management is deciding which partners are the best to approach at a given time in the company's life.

Clearly, one can play roulette by betting on every number and, while it feels good to have so many small wins, as roulette players know the pile of chips gradually gets smaller. Further, the opportunity cost is huge and approaching the right vendor at the wrong time can be damaging to a future opportunity. So, we need techniques to target better.

Now, there are some 1D approaches to this that can work, such as: which partners might optimize near-term revenue; which are the most likely companies to acquire;which are the most interested in forming alliances with us? While those can certainly bear fruit, and I am never one to scoff at revenue, these approaches are, in my experience, less likely to lead to the desired strategic outcome.

More interesting ways to find strategic partners are available, and use 3D techniques:

Try building a heat map with tactical and strategic X/Y axes, showing your company at the center. Plot potential partners on the tactical (revenue, near-term outcome) and strategic (ability to drive significant revenue, potential acquisition, etc).

It is also worth looking at your competitors and exploring what strategic alliances they might form, or grow substantially, that could damage your chances of success - those could be some of your top targets!

Repeat this at least quarterly for maximum effectiveness.

This is an art, not a science, but this approach should help maximize the outcome.